Is a new chapter in China Africa relations on the horizon?

By Ronak Gopaldas

Amid fast changing global geopolitical dynamics, China’s influence in Africa continues to attract intense scrutiny. In the post covid era, the relationship has faced several headwinds, but recent developments suggest a new chapter is in the offing. Shifts in the mode and manner of investment, along with diplomatic charm offensive are illustrative of these trends.  

The first area of change can be observed with the Belt and Road Initiative (BRI), China’s signature foreign policy programme under Xi Jinping. Launched in 2013, the initiative saw lending towards infrastructure projects skyrocket, with loan commitments peaking at US$28.4bn in 2016. However, the pandemic had a significant effect on its expansion, denting both the pace and scale of growth.  It also forced Chinese leadership to recalibrate to its international priorities and more cautious approach to expansion, given bubbling domestic pressures.

Consequently, BRI investment fell by 55% to US$7.5 billion from US$16.5 billion in 2021 in sub-Saharan Africa (SSA).^[1] This has led analysts to question the longevity programme, with some like Christina Lu (2023) arguing that the BRI has run “out of steam” and become a “shadow of its former self.” In addition, marquee projects such as Kenya’s Standard Gauge Railway (SGR) and Uganda’s Kampala-Entebbe Expressway (KEE) have received political backlash due to sovereign repayment issues, leading to allegations of predatory lending against China.

Against this backdrop Beijing has now sought to fine-tune its approach, announcing that the next phrase of the BRI will be “smaller” and “greener”.^[2] This is partly in response to criticism of the debt load it often burdens partner countries with and other environmental and human concerns. To this end, it was revealing at that at the 2021 China-Africa Cooperation Forum (FOCAC), China announced its first cutback in financial support to Africa, from US$60bn to US$40 bn over three years2. Half of this reduction was due to a shift away from direct infrastructure financing toward more trade credit – again highlighting China’s changing political priorities and many African countries’ increased debt vulnerabilities.

Second, China is adapting its economic engagement model in Africa. This is driven by several factors including the changing nature of China’s domestic economy, evolving geopolitical realities as well as demands for a fairer relationship by African sovereigns.

It was telling at the 2021 FOCAC that Beijing announced plans to move away from state-backed projects on the continent and focus instead on increasing reciprocal China-Africa trade and boosting Chinese private sector investment on the continent.^[3]

This change in approach is subtle but significant and has two key dimensions. As observed by Kenyan economist Anzetse Were in 2022, “the model of engagement has been evolving from one driven by trade to one driven by investment — transitioning from “going to Africa,” to “settling in Africa,” to “setting down roots in Africa.” She argues that rather than being export-oriented (as has been the case in the past), Chinese investments in Africa are now increasingly market-seeking and have started to treat African markets as viable in their own right. Importantly, with 3000 Chinese enterprises, of which more than 70% are private, currently invested in Africa , it is the private sector rather than state-run enterprises that are likely to spearhead the Chinese investment charge across Africa.^[4] This augurs well for skills transfer and job creation – two historic areas of criticism that have plagued Chinese commercial activity in Africa.  This shift towards this more mature and mutually beneficial relationship can be seen in Beijing’s intention to pivot from “infrastructure to industrialisation, and from extraction to investment” in line with the desires of African policymakers.^[5]

Third, amid a crowded and contested field where global powers are jockeying for influence, relevance and resources in Africa, Beijing is attempting to offer compelling alternative to western institutions and financing mechanisms. This has seen China redouble its efforts to build a financial and political architecture which reflect its world view. This is most evident is in the expansion of the BRICS – a formal group of non-Western powers such as India, China, Russia, Brazil, and South Africa. The grouping, which recently expanded by including two new African states - Egypt and Ethiopia – represents 3.5 billion, or 45% of the world's population and a combined economy worth over US$28.5tn - about 28% of the global economy. Beijing’s renewed efforts to establish an alternative global architecture can also be seen through other multilateral initiatives such as the Global Development Initiative (GDI), Global Security Initiative (GSI) and the Global Civilizational Initiative (CSI) ^[6]  - which advocate a set of ‘normative and institutional’^[7] changes to global governance in line with Beijing’s worldview. Moreover, Western governments are facing a backlash from nations of the global south on account of their hypocrisy relating to covid travel bans, the Ukraine and Gaza wars, and climate change. Meanwhile, Beijing has smartly positioned itself as a leading voice of the global south on many of these issues, while simultaneously exploiting the disillusionment with the West to garner support for its own global agenda. African nations should be alive to the impact of this approach.

‘Asymmetric decoupling’ is the phrase used by Davin Lubin of Chatham House to describe China’s international strategy. In short, the approach entails reducing China’s dependence on international imports while increasing the dependence of the rest of the world on its exports. This may be a deliberate and calculated approach to insulate against potential shocks (such as Western sanctions). Cobus van Staden, the managing editor of China Global South Project argues the commodities aspect of the Chinese relationship with Africa is becoming less important (with the exception of key critical minerals like cobalt) as China diversifies sources along the belt and road. He argues that the political side of the relationship is increasingly gaining more importance as China faces increasing pressure in the Global North.

Whilst this may create opportunities for savvy African nations to leverage their strategic value there are also considerable risks. African policymakers remain worried about the health of the Chinese economy and have perennial fears about an economic hard landing. Given the boom-bust nature of many African economies, which are heavily dependent on commodities, a crash in China’s economy will have devastating consequences on balance of payment and fiscal positions. Further, with a more discretionary approach to financing has the potential to create clear losers on the African continent.

Looking ahead success will largely depend on recalibrating expectations and aligning what each side wants from the relationship. According to van Staden, “While this differs much according to the country and the culture of the officialdom, in general, African officials are focused on efficient projects with short implementation times that are responsive to election cycles. They are looking for interactions that will create jobs and allow them to gain more from national assets. From the Chinese side, they are interested in expanding markets and supply chains for Chinese companies, as well as building political relationships that will benefit China on the global stage. Overall, they are interested in working with the Global South toward setting global norms and creating an environment friendly to China's growing international presence.^[8]”

Given these changes, Jana de Kluiver of the Institute of Strategic Studies (ISS) in South Africa cautions that it is imperative for Africa to actively shape the trajectory of these initiatives rather than addressing potential challenges reactively. She notes that the lack of unified African position compromises effective engagement with Beijing, although this is complicated by the diverse needs and interests of individual African countries.^[9] But in a context where Beijing is looking to bolster its political and diplomatic connections in Africa to strengthen its global position, African states will need to be alive to the opportunities and challenges amid this changing landscape.